COMHAIRLE CONTAE ÁTHA CLIATH THEAS
SOUTH DUBLIN COUNTY COUNCIL

south dublin county council crest

MEETING OF SOUTH DUBLIN COUNTY COUNCIL

Monday, June 14, 2010

QUESTION NO.2

QUESTION: Councillor E. Coburn

To ask that the Manager detail the "fixed price" contract tender process for projects (the new contract tendering process) and to detail how variations (as detailed in the previous contract process) are accounted for in the "fixed price" contracts compared to the previous structure?

REPLY:

In response to political and public concern about past cost overruns for large infrastructure projects, the Government, in May 2004, introduced construction procurement reforms under The Capital Works Management Framework, the main objectives of which were:

This framework provided for five new forms of Construction Contracts for Public Works in the following categories:

1. Building Works Designed by the Employer

2. Building Works Designed by the Contractor

3. Civil Engineering Works Designed by the Employer

4. Civil Engineering Works Designed by the Contractor, and

5. Minor Civil Engineering and Building Works Designed by the Employer

The new Forms of Contract have been designed to ensure that as much of the costs of public works projects as possible are reflected in the tender price that is subject to a competitive process. For this reason, the costs of identified risks likely to emerge during the construction phase are to be tendered for on a lump sum basis. This is intended to provide for optimal risk transfer from the Council to the Contractor which is supported by good quality information (e.g. on ground conditions) to help achieve greater cost certainty, better value for money and timely and more efficient delivery of projects.

Claims for delay and disruption are still provided for under the terms of the new contracts.  The Contractor may be entitled to an extension to the date for completion in the case of Delay Events and to adjustments to the contract sum in the case of Compensation Events. Within the course of a contract, changes in works requirements can be agreed between the parties which may have the effect of modifying, adding to or taking from the original specification. These may result in cost and/or delay implications. The new forms of contract facilitate an early identification of any such events. Full compliance with strict procedures is required if additional payment for compensation events and claims is to be secured under the contract.

More detailed information is available on the Department of Finance’s web site: www.constructionprocurement.gov.ie